GDP decline at annualized 0.6% highlights failure of ‘Abenomics’

May 17, 2018

Japan’s Gross Domestic Product in the January-March quarter of 2018 decreased by 0.2% in real terms from the previous quarter, which is a decline of 0.6% on an annualized basis. This again highlights the negative aspects of the Abe government’s economic policies, “Abenomics”.

The Cabinet Office on May 16 announced the preliminary figure for the GDP. Japan’s economy showed negative growth for the first time in nine quarters. Private consumption and domestic demand shrank. Under “Abenomics” which prioritizes large corporations’ profit-seeking activities, people’s living conditions have worsened.

Compared to the January-March quarter of 2013, the first quarter after Abe Shinzo assumed the post of prime minister in December 2012, the real GDP increased from 503.9 trillion yen by around 6% to 533.8 trillion yen, but private consumption grew only by 1%. Stagnant consumption hampered economic growth.

The biggest reason why people are reluctant to spend money is that the Abe government in April 2014 raised the consumption tax rate from 5% to 8%. It is clear that the flagging economy is due to Abe’s misgovernment.

PM Abe in his policy speech in January this year asserted that the nation’s economy is experiencing strong growth. However, Japan’s GDP growth in 2017 stood at 1.7%, the lowest level among G7 countries, compared with 3% for Canada, 2.5% for Germany, and 2.3% for the United States.

In the last five years, workers’ wages went up by 5%. During the same period of time, the number of employees increased by 2.1 million. The amount of disposable income per household, which is obtained by subtracting social insurance premiums and direct taxes from gross income, decreased by 3%.

In contrast, business investment grew by 20% and exports by 30% during the same five years. The depreciation of the yen induced by Abe’s massive monetary easing policy seems to have helped large corporations sell their products abroad.